Destatementization Meaning: Fill & Download for Free

Before getting to which Demat Account is better for investors, it is important to know what is a Demat Account and the function it serves. A Demat Account is very much like a savings account in which an investor can keep their shares, bonds, mutual funds, etc. Through this account, one can do transactions i.e buying and selling of shares. A Demat Account uses the concept of dematerialization in which the investor’s physical share certificates are converted into electronic format.For opening a Demat Account, one is required to choose a Depository Participant or DP who acts as an intermediary between the investor and the depository or registrar. Now, once the investor has figured out the DP he wants to go ahead with it is important to know which Demat Account would be most suitable to him. It is a general and prudent tendency to always opt for anything which involves fewer expenses. The same goes for a Demat Account. A Demat Account comes with numerous charges to pay which differ in case of different DPs. These charges range from Demat Account opening charges to postal charges and are expected to be different with different financial institutions. Let us see what these charges are:Demat Account Opening Charges: The first and foremost charge an investor will be expected to pay is going to be Demat Account opening charges. This charge is paid as an opening fee for the Demat Account but is by no means fixed or even mandatory in every case. Certain full-service stockbrokers offer the opportunity of opening a Demat Account for free. With others, the one-time payment of Demat Account opening charges is nominal.Annual Maintenance Charge (AMC): After the Demat account opening charge, the fee an investor has to pay next is AMC. AMC refers to the payment charged for the services provided by a DP to maintain the investor’s account. Irrespective of the fact one makes a transaction in a year or not, he will have to pay AMC. However, there are financial institutions that provide the benefit of no AMC for the first year of the account opening.Dematerialization Charges: As mentioned early, dematerialization refers to the process of converting a physical share certificate into an electronic format. In order to hold one’s shares in the Demat Account, an investor is required to convert his physical shares into the Demat account. A fee is charged for the conversion of these shares. While some brokers charge a fixed fee for each conversion of shares, others do on the basis of the total value of the securities.Rematerialization Charges: Rematerialization refers to the reconversion of shares in the electronic form to their original physical form. Just as charges are levied on physical share conversion so are they on rematerialization as well.Conversion of Mutual Fund Units: A fee is also charged for the conversion of mutual fund units into electronic form. Additionally, for the conversion of electronic units into their original physical form, an investor is again required to pay the requisite sum. The process of converting mutual fund units from their electronic form to physical form is called destatementization.Postal Charges: Postal charges refer to the amount the DP charges on an investor for the courier services he uses for the transit of relevant documents regarding the investor's stocks.Based on these choices, an investor would do well to look for the objective of cutting down on avoidable expenses. There are many such financial institutions which provide a pruned Demat account charge structure. Institutions like IIFL offers no Demat Account opening charge, first year free AMC, dematerizaltion, and rematerialization charge on per unit conversion rather than based on the total value of the shares and similar cost reductive offers. The point is to go for an institution that charges the least or at most no more than what is commonly agreed price in the market.So it will help to look for a way in which an investor can look out for redeemed charges wherever he can: be it from Demat Account opening charges or postal charges. There are different institutions and DPs which offer rebates on different charges. So any investor should opt for a Demat Account where charges can be reduced to the least one has to pay. It should be kept in mind that the assessment of these individual charges should be made collectively. Like, if the Demat Account opening charges are nil but the other charges apply at a higher rate, there is no point going for that offer. However, it is important to keep in mind that these rebates should in no way come in between the services one desires for and the charges one could have paid but otherwise compromised on. An investor should always look for a fine balance between the charges and services as they come with a Demat Account.